Skip to main content

tv   QA with Sandra Navidi  CSPAN  March 12, 2017 11:00pm-12:01am EDT

11:00 pm
minister may taking questions from the members of the house of the common -- house of commons. later, a discussion of u.k. defense strategy with nato and the european union. ♪ >> this week on "q&a," sandra navidi, founder and ceo of the consulting firm beyond global, she joins us this week to discuss her book, "superhubs: how the financial elite and their networks rule our world." ♪ brian: sandra navidi, author of "superhubs." page 13 of your book, you write this, serial entrepreneur, super
11:01 pm
investor nick hanauer has cautioned his fellow zillionaires that the pitchforks are coming. can you tell us whether you agree with that? or why you think that's true? sandra: i think the pitchforks have been coming for a long time. i have been concerned since 2007, which is why i call my company beyond global because i thought we would see a huge backlash that would be global in nature and far-reaching and actually result in a scaling back not just of the financial institutions, but of globalization in general. brian: what do you do for living? sandra: i consult. brian: about what? sandra: about macroeconomics. brian: i probably would not hire you. but who would hire you? sandra: private banks, it gives them an outside perspective and connects the dots. what i also i touch upon is the echo chamber that many ceo's operate in. i used to work with nouriel
11:02 pm
roubini, who's an economist, and he would also give his analysis. there is value in an outside perspective. like i say in the book, if you are surrounded by like-minded people who all think the same things, have the same background, it becomes an echo chamber that results in analysis paralysis. the situation we find ourselves in now. brian: can you tell us a story about bill gross? sandra: the story in terms of -- brian: pimco, the story you tell in the book. what does he do and why did that get your attention to put him in the book? sandra: the book is about networks. superhubs are in the center because they have the most connections to any other node in the system. and so, i point out people like george soros or jamie dimon or bill gross because they are connected to everything.
11:03 pm
they have the greatest influence on the system. i tried to describe how these people get there, what propels them to the center of the network. part of it is personality. they deviate a little from the norm. they are extreme in many different respects. i talk about bill gross in that respect. he is single-minded and very focused and very conscious of his power. i basically describe how he has been very influential. has attracted a lot of money. even when he left pimco, because he clashed with staff, he attracted billions to follow him. brian: what is pimco? sandra: pimco is a giant bond investor. they invest billions in the global bond market. it now belongs to allianz.
11:04 pm
brian: who do they relate to? who do they do business with? sandra: they do business -- they manage money for other people, meaning institutional investors. could be your pension fund, my insurance company. they collect our money and they have to invest in institutional investors because they have to pay us on a regular basis. the insurance company needs to make a payout. they need to generate income and that is why they invest with all kinds of different institutional investors. brian: go back to superhubs -- is that a person? sandra: well, i use network theory and i apply it to the financial system in our society. network theory is a relatively new science. it ties into complexity science. network theory is the
11:05 pm
architecture of complex systems. the financial system is a complex self organizing system. the superhubs have the most influence over the system but no control over it. to answer your question, examples of other complex systems, our brain or an ant colony -- in our brain, there is no major cell telling the other cells what to do. we have superhubs in our brains. ecology is another example. nodes prefer to attach to other nodes which already have many connections. in nature or our lives, those who have the most connections, it increases the chance of our survival. brian: how smart are these people who manage all this money? sandra: exceedinly smart. they have a bird's-eye view over the system. if they understand the system, it enables them to put themselves in the best position.
11:06 pm
brian: i want to ask you about some personalities. run fuld, who used to lehman brothers. i want to show you a short clip. if he was so smart, why did the company go out of business? let's watch. [video clip] broughtn's demise was about by false rumors, rating agency downgrades, a loss of confidence by clients and counterparties, and buyers sitting on the sidelines. waiting for an assisted deal. it is too late for lehman brothers. but the government has been forced to change the rules and provide substantial support to other institutions. [end video clip] brian: he blamed everybody but himself. is that a fair assessment?
11:07 pm
sandra: what i say is everybody in that sphere at the very top, they are all extremely smart and industrious. what sets them apart is their networks. he was a little bit of an outlier. he was not a people person. he came from a different background. he physically isolated himself within the bank and cut himself off from vital information flows. meaning from other wall street superhubs. other ceo's, the market in general, but also within the company. he landed in one of those echo chambers where he surrounded himself with yes-men. people who were exactly like him. they figured out quickly it was easier to get along with him if they did not object to anything. that became his downfall because he wasn't plugged in anymore. brian: what would have happened if a lot of people liked him during the 2008 crash? would they have bailed out lehman brothers?
11:08 pm
sandra: it could have made a difference. it is hard to say. apparently, he antagonized hank paulson and was not on the best terms with him. to paulson's credit, he tried to help lehman. it wasn't purely personal, but i do think personal connections can tip the scale and supposedly president bush did not take his call. sometimes these personal relationships make a difference. brian: let me show you a short video clip. you are not with nouriel roubini anymore. tell me about him and how much work you did for him. [video clip] >> there is already backlash because of this financial crisis against free trade, market economies, capital flows, and i think part of the backlash is because of the economic and social cost of this crisis. a populist backlash.
11:09 pm
[end video clip] brian: that was back in 2010. we have not seen as much of him. he was telling us things were not going to go well before the crisis. why did he know? sandra: interestingly -- and i had conversations with george soros. we were all people not from here. we had a transatlantic perspective and more of an outsider's perspective. that can give you a leg up. i think nouriel is a very independent thinker and not afraid of controversy. i think it takes great courage to stick your neck out and go against consensus. especially in 2007. i remember davos, that year in january, nouriel was in the absolute minority. nobody foresaw the crisis. i mention in the book that ben bernanke mentioned that he had no clue of the crisis because he
11:10 pm
was not aware of the toxic -- toxic papers that were in there. brian: you have a law degree? sandra: i have a law degree in germany and here. and i'm admitted in both countries to practice. brian: where are you from? sandra: germany. brian: when did you come to the u.s.? sandra: for a job offer. brian: did you grow up learning english? sandra: i got english later. i started with latin. my parents made me start with latin. i had english when i was 13. brian: what did your parents do? ran his ownather country. he was from iran and came to germany to study. my mother was a housewife. brian: when did you get interested in money? sandra: i have never been interested in money. i would say more generally
11:11 pm
business. brian: why? what got you interested in it? sandra: business is entrepreneurial. it is international. you interact with interesting people. brian: go back to what you do for a living. if i say i'm going to hire you, what is the first thing you do for somebody when you walk into a large company? sandra: it is very individual. i deal with a handful of clients. i deal with family offices. i establish a platform for them. i mention in the book -- the importance of networks can only thrive on platforms. the way we organize our society is through networks. we have become the prevailing species on this planet. through our cooperation and networks. family offices tend to be slightly isolated. a family office -- if the family makes a lot of money because they have a company or sell a
11:12 pm
company, new money, old money, third-generation, they make so much money. if it's in excess of $500 million, it beomces -- becomes worth it to become your own investing firm. these family offices, they are not from the financial industry and often they come from small cities and are quite isolated. i help them to come together on a platform where they can exchange expertise globally. i was brought on because of my global contacts. brian: you open the book by talking about a trip to davos. what is davos, where is it, and what does it look like? why did you open the book that way? sandra: davos is a small ski village in switzerland where the
11:13 pm
world economic forum has been taking place for over 40 years. the forum has been a private conference endeavor but it has been elevated to the status of an institution akin to the red cross for public-private partnership. and every year, in excess of 2500 people come together, world leaders, decision-makers, ceo's from all countries. young global leaders, people from philanthropic institutions, a wide mix of people come together to discuss global problems and find solutions. brian: what does it cost to go? sandra: it is expensive. i think for a company, close to 500,000 swiss francs. brian: what happens when you go there? how often have you been? sandra: i have been 10 years in a row now. brian: so, what do you do when you get there? sandra: essentially, you attend
11:14 pm
panels and workshops and you interact with people and you speak. it is kind of amorphous. everybody can do whatever they want. you can sit in workshops or panels all day long. many people use these meetings for bilateral or side meanings. -- meetings. it is very efficient. four days can spare you three months of travel. you get to see everybody. it is very good to take the temperature of the world. the first year i attended was 2007. i was already very worried. i could tell something was in the pipeline, something was brewing. i think it is because of my background in structured finance. i knew something was off. at the latest, 2009, it was doom and gloom. the last two years have been better. this year, people were concerned again.
11:15 pm
brian: i want to put on the screen -- i want to get your perspective on this. between 2008 and 2015, this government fined a whole bunch of banks a lot of money. it'll show you. bank of america was fined $80 billion. jpmorgan, $39 billion. lloyd's of london, $20 billion. lloyd's ofbarclays, $14 billion. rbs, $11 billion. wells fargo, $10 billion. why was no one ever indicted for criminal activity? why is it that all these banks were fined this kind of money and the people who run them never got a hit on their salaries and their stocks stayed up? and i could go on and on. to the outside world, it's hard
11:16 pm
to figure this. have no good explanation or an excuse for it. i do not think it is right. the way that the system is set up. regulatory capture, psychological capture, the revolving door that elevates the problem. people go back and forth between the public and private sector. so many examples. i have several pages in the book on that. and, i think often times, the ceo at the top does not exclusively tell people to do something that is illegal, but he sorts of sets goals and people feel pressure and make it happen on lower levels. somehow in that whole process, the accountability is lost. brian: what is your reaction when you hear someone who is worth a lot of money say they will give half of it away before they die? sandra: i think it is very good, but i think it would be better if the system were set up
11:17 pm
differently so that they wouldn't have all this money and have the power to decide who gets it, but it would be distributed more evenly from the get-go. brian: if you do not have any deductions, you can make a lot of money. a guy like warren buffett, worth $50 billion or $60 billion, paid 17% last year. if he gives it all away, isn't he just paying the government what he should have paid them in the first place? sandra: i guess you could argue that. but i still think it would be a better way and would be more empowering -- we have a situation where ceo's make 300 times more than what the average worker makes. i think this has contributed to the pitchforks coming. we are seeing increasing polarization and populism all over the world. brian: when did you think this book was worth spending four years on? what led up to that? who is the audience for this book?
11:18 pm
sandra: what led to this book was. ignorance -- pure ignorance. i had no idea what it would entail. i just started writing. the longer i worked on it, the more passionate i became. i think it is primarily geared at the general public. -- it was reduce rejected a couple of times because it was too academic. i was fascinated with network theory. publishers said this is very interesting but nobody is going to buy it. you have to insert stories. i tried to make it more tangible and as interesting as possible. it's not a bank bashing book. i'm not terribly credible. i disclose this in the very beginning. i wanted to give a sort of neutral perspective so people would have the power to make their own decisions. brian: let's go to page 207. i will read it and get you to talk more about it. "as we mingled during the
11:19 pm
cocktail hour, i checked the place cards. to my delight, i saw that i would be seated by john meriwether, the john meriwether, who had made wall street history. in light of his background, i expected a charismatic and swashbuckling personality who would mesmerize us with fascinating anecdotes. contrary to my expectations, in walked a shy man." who is john meriwether? sandra: john meriwether started long-term capital. decades before the crisis, was a precursor to the 2007 crisis. because with his fund that he started, he hired two nobel laureates to work with him many , wall street luminaries. they started this shop and they attracted unbelievable amounts of money that they managed. they designed quantitative computer models with which they managed the money. the problems with computer models, as we've seen in the
11:20 pm
crisis, all data points come from the past and all experiences that you factor in. as steve jobs said, you can only connect dots for the past, not going forward. so, what they did not perceive, was that all asset classes would become correlated. when the russia crisis happened, the market fell. basically long-term capital was the first fund that had to be bailed out by a concerted effort of wall street, because it could have unraveled wall street at the time. brian: was john meriwether one of the super hubs? sandra: he certainly was. he tried two comebacks and people would still give him money because he is very smart. his track record was a little bit -- was not the best anymore. it's the halo effect. once people have this reputation and are considered on wall street to be ingenious everybody , buys into it. brian: is there a way you can
11:21 pm
characterize what a superhub is like? meaning -- i'm talking about the people. what would you say about most of them? sandra: almost all of them are male. as we see on wall street. there is one woman, abigail johnson, who came into her position because her father retired from fidelity. it's the fidelity family. europe,ander in because her father passed away. we have two women because of their fathers. it is almost all male and white. they are -- they like to have power. they strive for power. alpha personalities. curious, interested in learning, expanding their horizons, good at building relationships and networks. brian: can you trust them? sandra: it depends on where you are coming from. personally, i would say yes. because a precondition of a good
11:22 pm
you areship is trustworthy, because otherwise people won't enter into transactions with you. brian: do they deserve the kind of money they make? sandra: everything is relative. i argue in my book that i do not think so. it should be somewhat in relation to the value that you contribute to society. i compare it to doctors for instance. they don't get a bonus because the patient does not die. or because he survives the surgery. or policemen who put their lives on the line and they make a fraction of what wall streeters make. but i think it's a reflection of the value that we as a society have. brian: how much did you have to tiptoe around the personalities in this because of the kind of work you do and that you might work for them someday? sandra: i did not tiptoe at all. i did not include any nasty gossip i may have become aware of or any nonpublic information with which i was entrusted. it is somewhat critical here and there, but nobody has complained
11:23 pm
so far. brian: i want to show you some more video. here is a man that is seen going into the trump tower during the transition period. his name is anthony scaramucci. [video clip] we are working super hard up there. we have a real executive search process in place to help the president elect and vice president pick people. what he is really searching for his like-minded people who want to serve the american people, subordinate their egos to the collective body of the team, and really put the american people's interest first. [end video clip] brian: what does he do? other than be an aide to donald trump. sandra: he started a money managing company, sky bridge capital, which he just sold. brian: how big of a business was it? is he just going to be an aid to -- aide to donald trump? sandra: i think he managed up to $13 billion in his fund. he just sold it.
11:24 pm
he was supposed to be the advisor to the president. it is -- as i understand it, it is currently in dispute. he may become an ambassador. brian: here is jamie dimon. let's watch this. [video clip] >> in hindsight, the traders did not have the requisite understanding of the risk they took. should have gotten more scrutiny from senior management and the firmwide risk control functions. [end video clip] brian: tell us about him. sandra: jamie is the unofficial diplomat for wall street here in washington. he has been the absolute alpha male. he has not backed down. by all accounts, he has done a good job. it is a hard job. yeah, i don't know. brian: again, tell us why jpmorgan was fined $40 billion. and that's several different
11:25 pm
reasons in there. but how do you then maintain your ceo-ship and you get rewarded and the stock keeps going up? explain it to the average person. if they did the same thing, they would be bankrupt. they wouldn't have anything. sandra: yeah, it's capitalism without bankruptcy is like religion without hell. there is no accountability. these big banks have an insurance policy from the taxpayer. after the crisis, nouriel roubini and others have argued that big banks should not be allowed to become so humongous. they should be made smaller. through laws and what ever -- and whatever. not be broken apart. big banks are bigger than they have been ever before and more powerful and have a direct channel in washington. we see the advisory council president trump has with all the ceo's. of course they exercise their influence. brian: do you remember why you
11:26 pm
words "slimy weasels" in your book? sandra: yes, it was a quote. brian: what was the purpose? sandra: dalio is an investment manager. i think he runs the largest hedge fund in the world. he wrote a book -- i think it was originally for his employees. it was an expression he used. and when the press got wind of it, he was criticized and -- vociferously for it and ridiculed also. brian: you say in his book, in which managers who talk about subordinates behind their backs are called slimy weasels. you say that he deluded emotionally illiterate -- he was deluded, emotionally illiterate,
11:27 pm
and weird. let's watch a little bit of mr. dalio and see if you can expand on it. [video clip] >> partially it's a matter of the differences in income. partially, it is a fed up-ness. they are not under good control. partially, it is a lack of what davos represents. which doubles -- davos represents the inclusiveness of speaking. it is a group of elites essentially. it is an anti-davos way of representing. i'm not represented. in the 1930's -- every country in the 1930's ended up becoming more extreme. [end video clip] brian: i want to read more of what you wrote in your book about his fund. to one ex-employee, everyone gains 10 pounds in the first year due to the great cafeteria and long hours in an isolated environment. all emails are monitored and conversation, as well as phone calls, are taped, except for the most personal ones.
11:28 pm
everyone can listen to the recordings which are stored in a, 'transparency library.' overhead cameras document employees' every move. and believability matrices track mistakes, and gossip is strictly prohibited." is that talking about what he does in his company? sandra: yes. i cited the "wall street journal" and "financial times." i have listened to a couple of people who have worked there. i recently heard that he complained about this characterization. probably the facts are correct. he would, i presume, beg to differ with the impression this invokes, but i guess the point is that it's a hyper transparent culture with great control, but like, a it serves to, major brainstorming operation to
11:29 pm
harvest the best thoughts of everyone. brian: why would anyone want to work in a place where they monitor their emails, listen to their phone calls? what's this thing about "transparency library"? sandra: in detail, i should not really speak to it because mr. dalio would be best equipped to talk about it. this is a very extreme example of wall street culture. maybe that's the reason why i mentioned it, because it's the epitome of a military kind of structure where you have to serve the cause. i go into this in other parts of the book. you stay 24/7. you brag about your all nighters. this culture of glorifying not needing any sleep and always being at the disposal of your boss. that has been the culture there for a long time. part of the reason why wall streeters make so much money. or justify the money they make. brian: how do these people live?
11:30 pm
what kind of houses do they live in? where do they live? sandra: on average, the lifespan of a banker is relatively short in that profession. an average seven or nine years because it is so stressful. the superhubs have extreme stamina and mental strength. either they originally equipped for this position to get to the very top or they adapt along the way. they have very nice lifestyles. they have tons of money. but i do think that the superhubs who actually make it to the very top and stay there are not primarily motivated by money. they want to have standing and status. they want to be respected and .ant to have power even in the negative sense, power on a basic level is to have self-control, to be in control of your life. science has proven that makes people happy. brian: what you think of the charity world? you write about it in the book. once you have made a lot of money, you get interested in
11:31 pm
charity. what you think of that world? sandra: i have thought a lot about it. whether it is hypocritical for these people to promote their egos. i think it is for the purpose and it is worth it. if they get press coverage and positive reviews, that is fine. i think it is a good self reinforcing mechanism. if you solicit money from people and they are also obliged to donate to your causes -- donations have spiked since the crisis again. brian: let me show you another person you write a lot about in your book. paul tutor jones. he is talking about inequality. i want to ask you about him. [video clip] >> the greatest income inequality and the greatest social problems, according to those metrics, it is the gap between the wealthy and the poor. it will get closed, history always does it. it typically happens one of three ways. either through revolution,
11:32 pm
higher taxes, or wars. -- what are we more likely to see? i don't think it is just in this country. we are seeing in in the europe and the middle east. these phenomenon kind of a exacerbate each other. have donald trump as president and the things he is doing, they are having consequences in europe, for instance. ok, theay is that, organizing system and the super hubs have enabled corrective mechanisms for a really long time. every system for a while becomes more homogenous. that is when corrective mechanisms kick in to correct the system.
11:33 pm
the super hubs have disabled -- whatchanisms and the you just mentioned is a manifestation. everything has become more extreme as a result of power loss. become so skewed that the pendulum affected the other extreme is very strong, for instance i think donald trump is an extreme example. we are seeing the same phenomenon coming up in europe. in hungary. it is very worrisome. brian: how much do you think about or worry about our $20 trillion in debt? .> i worry about it a lot also because the debt levels worldwide have never been higher. with financial engineering, we have been able to gloss over it
11:34 pm
for a while. brian: what is financial engineering? sandra: that is when you take debts or physical things and you transfer them into security. say you take subprimes. the subprime crisis was an example. you take all those mortgages. these are all papers. you take all of these papers and you slice and dice them. then you put them into computer models, it is very difficult to explain. it is artificial constructs. it is all abstract financial products. brian: isn't it just rich people just yanking all of everyone else's chains? sandra: yes. actually, i identified this as a problem. the financial is a nation we have seen over the decades. financial is a should means financial engineering, fueled by debt. after a while, all of this money is shuffled around in transactions.
11:35 pm
and only a part goes to the real economy. reaction tois your traitor? sandra: a class traitor is like george. brian: i just showed you nick hanover. it seems like in the book you work a lot with george soros. sandra: i think that many of the superhubs see what is wrong with the system. one of the key questions i ask in the book is if they hold the system prisoner or if they are prisoners of the system. is it their fault? is it the system's fault? i have come to the conclusion that it is the interaction of both. but, as long as these people are -- i actually asked george soros wants, why he
11:36 pm
donates all this money, why he does not just changed the system. he said, as long as it exists the way it does, i operate within the system. brian: you talk a lot about george soros and his interest in being in intellectual writer. can you tell us more about that? he wrote books. you are actually a little critical of him. the books were not that impressive. sandra: no, i cite the financial times. brian: you said it was not very impressive. is that not the same as saying you did not do was impressive? sandra: no, because i have not read it. the early examples of research i have not read, i just cited it. the reason i cited it is because they all stress the importance of failure. they say they are the most transformative experiences in our life. george is very respected as a public intellectual.
11:37 pm
i talked about his humble beginnings and that he didn't that the criticism beat him down but he tried all the harder. brian: go back to this, the class traitors. it seems they go out and get it both ways. i mean, they go out and make a lot of dollars. in then they say, oh it is horrible that we have so much inequality. but they go right on living in another world and continue to make money in that world. why should we even listen to them? sandra: i am not going to make any excuses for them. i think you have a very valid point. i think we should still listen to them. they have leadership functions in our society. they can make things happen. i think it would be foolish to completely disregard them. and also, yes, we can start a revolution solely from the bottom-up but that probably would not an entail -- that probably would not have a spearheaded leadership and it
11:38 pm
would probably cause a disruption of the system that would be uncontrolled and it could be damaging for all segments of society. brian: you have the koch brothers on the right, george soros on the left, is there a difference between what they are doing? sandra: i think it is very different ideologies. brian: should one be praised and the other be criticized? sandra: i think that the truth is always somewhere in the middle. i don't know the koch brothers so well. i don't think george is as extreme as he is made up to be. it is interesting to polarize people and point out extreme things. i don't know. i think what we should do is harvest the best idea and we shouldn't just blindly follow any of them. brian: here is another video of another man named michael milken.
11:39 pm
[video clip] financed over 3000 companies. i have only had one ceo tell me they were in it for the money. i think it is about creating jobs and empowering an individual. end video clip] brian: why would someone say that they are in it for the money? sandra: people in finance have to say they are in it for the money. you wouldn't trust a banker if they weren't in it for the money. i think most of the superhubs are not just successful because of the money. that doesn't give you the motivation to go that far to the very top. the difference in the kind of money they make, a hedge fund can make a couple million a year. make $20ceos can million. the differences are pretty
11:40 pm
great. brian: a bank ceo, they are investment banks, these are all names you know. jamie dimon, james gorman of morgan stanley, 21 million, michael corbett, 16.4 million, when you see those numbers, what is your reaction? sandra: i think it is too high, very clearly. but the fault also lays a little bit with the board. the board should exert more pressure's on ceos and i think maybe jamie dimon challenged his board. i don't remember exactly. also, shareholders can exert more pressure. warren buffett has been very critical and said that the money not wall streeter's make is on a level with what they contribute. brian: do you think ceo's earn their salaries? sandra: i think shareholders are
11:41 pm
becoming more influential. institutional shareholders as well. it is not shareholders like you and i. it is institutional investors that old arch contingents of fores like blackrock example. it is not viable anymore to give these huge competition packages. -- compensation packages. brian: brian: you have been to davos two times. you are talking about, there aren't many women in it at all. what is their reaction to you when they see you in a crowd? sandra: well, now they kind of know me but i think it initially -- i don't know. maybe i have a little bit of a check on my shoulder but i feel that initially i have to be fighting a little harder to be taken seriously. brian: how do you see that in a group?
11:42 pm
sandra: it is subtle, it is in tone of voice. being ignored, you know, stuff like that. byan: have you been accused any of them of having a chip on your shoulder. but i: i don't know, think that maybe i do. i think many women do. i have a whole chapter dedicated to why there is so you women in finance. -- few women in finance. brian: do women have any chance of doing what all of these white men have done? sandra: the chances are very slim. they are very accomplished to make it to make it to senior positions. they are usually more educated than men. they have a better track record. i say to women, if you enter the profession, be aware that it will not be a walk in the park. at some point, your career will probably stall. brian: what do you personally do when somebody comes up to you who you would categorize as a slimy weasel? they have to be 25 people that go to davos that you would
11:43 pm
characterize as a slimy weasel. how do you deal with them? sandra: i try to avoid confrontation and be professional and polite. brian: here is larry summers who has been in politics, president of harvard at one time. you write about him in the book. listen to this. this is 2017. >> i have been very troubled by the attitude of business people from the united states here in davos.s -- here in people who two or three months ago were saying that he was a man who they would never do business with our today hailing
11:44 pm
him as an economic statement. [end video clip] brian: he is obviously talking about donald trump. but larry summers himself was basically run out of harvard. why should we listen to him? sandra: i called him in the book. he says to elizabeth warren or sheila bair, he says if you are part of the system within the system, you can't criticize the system, you will be kicked out. on the outside, you can criticize it. only nobody will listen to you. i applaud larry for what he said. i can attest to the same thing. i have spoken to many ceo's. i think larry is outside of the system and he is voicing valid criticism and it is a key question. how should ceos react when they are being antagonized, blackmailed and intimidated? brian: what do you think?
11:45 pm
donald trump calls him into the white house? they sit around and talk into a microphone for a couple hours, come out and say it was great. what you think when you see that? if you are home watching television and you saw these very high position ceo's saying that the world is going to look good for the future? sandra: on the one hand, i am disappointed. i think it is easy to criticize them on the other hand. they are sometimes in more than 100 countries. they have unbelievable responsibilities. with this president who is very unpredictable, of course they have to tread lightly. whereas in the outside, we have no idea where it is going. i think in the beginning, i think what they are trying to do, this roundtable that stream schwarzman is heading, they are influenceexert their said that one donald trump
11:46 pm
antagonizes china or mexico, they are going to try to limit the damage somehow. brian: what you think of our new president? sandra: i see him very critically. brian: how? tell us more. sandra: i don't think he has the temperament or the qualifications for the job. brian: what about all the ceos that you deal with? sandra: i hear them say the same thing. brian: what is the cult of failure? sandra: we must not be afraid of failing. i think it is one of the great things of american culture, entrepreneurial culture. people here are allowed to fail. they are not being looked down upon as long as they get up again. superhubs have all experienced great failure, they have always stood up and kept on fighting. i think that actually is -- i do not regard them as role models
11:47 pm
per se, but i think that is a very good quality to have. brian: alexander wolfe was here talking about silicon valley. he said it is a positive thing to fail. where did this come from? the idea that failing is good? what is sure perspective? sandra: i think that failing is good in moderation. i don't think we should make it a cult. i think that is exaggerated. that promotes too much risk-taking. we should try and limit the downside somewhat. we all experience rejection and failure, even on the smallest age. at a young i think it is good in life, not just careerwise, generally even. brian: if the pitchforks are going to come here in the future, what you suggest people look or as an indication that things are going to deteriorate from an economic standpoint in
11:48 pm
?he world sandra: i think our system is very fragile indeed. bankank of england, the for international settlements, they have all warned that the next financial crisis is just around the corner. heart of the reason is because it is so intertwined with politics. global debt levels. it could go very quickly. what we have seen in the past is when there are dramatic and flexion points like the arab spring or the financial crisis, institutions that are little with world experts like the imf or cia have missed that information. they have the best information, they have a birds eye view and they miss dramatic developments. also, i cannot tell you, nobody can tell you what would trigger a failure of our financial system or the economy but what i can say is that our system has become so fragile that it
11:49 pm
becomes even more susceptible to what is called a "what if i affect." meaning remote disturbances that could be very far away. this example of the winged fly of what is it called? a wing flap of a butterfly in tokyo can contribute to a tornado in the united states a month later. so, fragility makes the whole system a little more susceptible to the disturbances that could failure.trigger brian: let me ask you again. how will we know? i mean, we saw what happened in 2008. and happened very quickly. but how do you think we will know when things are falling apart. will it be the stock market? will it be the interest rates? opus out. be the i mean, it could stock market. at the stock market is just for me basically a psychological
11:50 pm
indicator. a manifestation of the herd instinct. right now, it is off the charts good but it does not necessarily reflect the underlying fundamentals. -- a little wary of the stock market as an indicator although it can reinforce a downward spiral and people panic, nobody lends money anymore, we have a bank run and illiquidity will lead to insolvency. it can exacerbate bad developments. what i am more concerned about right now is the political developments we're seeing all over the world. the instability in the middle east. i am afraid that something bad could happen there. brian: here's another one of the personalities you wrote about. a man named larry fink. this is about 30 seconds, he is here from 2016. [video clip]
11:51 pm
>> you have germany moving to the right, you have brexit, that will probably lead to a hard landing. all of this is about anger. you have the bernie sanders, donald trump phenomenon here. i think hillary will win. if she wins, the anger is still here. in fact, maybe the anger gets worse. [end video clip] brian: who is larry think? sandra: larry fink has founded blackrock. that is the largest asset management company in the world. they manage money from institutional investors like pension funds and sovereign wealth funds. i mean in that sense, basically , all the money. brian: what is he like? sandra: i don't know him well, he is friendly, charming from what i can tell. brian: we have a clip of view from back in 2006. let's run that clip and see what you think 10 years, 11 years
11:52 pm
later. clip] video work bright be at eyed and bushy tailed. i cover european markets. i just got a call from a german client. it runs a pretty quickly to 250-500. sometimes it is exciting to close a deal. [speaking german] >> a lot of energy and testosterone comes together. every so often, you have to feed yourself and your mind other things for other dimensions. i picked up quantum's -- quantum physics in my spare time. ] nd video clip brian: what was that from?
11:53 pm
sandra: that is "wall street warriors," a documentary on wall street. i was working at a bond shop. that was the job i had to come over to the united states for. i was there general counsel. brian: what do you have to know to work in a bond shop? what kind of education do you need? sandra: as general counsel, i worked on platforms. so that would be the structure, the paperwork. contractual documents, you have to negotiate with agencies. you have to talk with clients. you have to go into regulatory matters. orissa or german pension plans, you know, there are legal restrictions. you have to somehow make it come together and make it work. brian: where did you grow up in germany? what was life like there? sandra: duesseldorf. actually, a small town. germany is very homogeneous. it is provincial. there was a british headquarters
11:54 pm
in my city. so i has a teenager, i would go there and a basketball land charges to speak in wishes best as i could. it was a little bit of a window to the world. brian: do you think in german or american -- english? sandra: both. depends. brian: can you go back and forth with the languages like you did there on the phone? sandra: yes, i can and i dream in both languages. sometimes i feel that i am not fluent in either anymore. my english isn't imperfect and my german is imperfect anymore either. -- isn't perfect anymore either -- my english isn't perfect and my german isn't perfect anymore either. brian: what is better about the united states compared to germany and what is worse compared to germany? sandra: to compare those two is very if called. i mean, i love the united states because it is a melting pot. he goes amidst diversity. i feel like it brings out the
11:55 pm
best in people. the highest common denominator and some sense and that has been its value. that has what has made it so competitive globally. the: i haven't looked at numbers lately but i think about a sixth of our country, their origins are germany. do feel that when you're here? do you feel that people looked just like the germans you grew up with? sandra: no, not at all. i think because of history, germans do not really stress their heritage. i don't usually notice. brian: how do germans look at money compared to americans? sandra: germans are more understated about money, it is something you don't talk about. i don't think as an industry they have been very good at managing money. before the crisis, all of these american money managers would to
11:56 pm
descend upon germany with their suspenders and sparkly watches and sell all of the subprime paper to germans and they bought it indiscriminately which led to that headline on the wall street journal, subprime on the rise. with things i actually worked on and people i knew. i cannot believe it. brian: it was written in the wall street journal that donald trump had $300 -- $309 in loans with deutsche bank. what do you think about this? sandra: you asked me about donald trump earlier. my main concern is his conflict of interest and his family and disclosed system he is establishing. my book is about networks and superhubs. it is a closed off system where personal relationships become
11:57 pm
all the more important. that means that the rest of the world, u.s. citizens, they don't have access. brian: this book is called an international bestseller. when was it first published and where was it published? sandra: germany, in january of 2016. it was a bestseller before it came out. brian: the name of the book is "superhubs: how the financial elite and their networks rule our world." our guest has been sandra navidi, we thank you very much. sandra: thank you very much. announcer: for free transcripts or to give us your comments about this program, visit us at q& these are also available as
11:58 pm
c-span podcasts. announcer: if you liked this q&a program, here are some others you might enjoy. a new york times columnist writes about the 2009 financial crisis in her book, "reckless endangerment." withhere is an interview warren buffett and also with his sister, doris, who talks about her involvement with the sunshine lady foundation. you can find those interviews and others online at
11:59 pm
>> monday night on "the of an ctoors" the ceo the internet and television foundation talks about what we might see from the new fcc chair. by a reportiewed from bloomberg. >> can you talk more specifically about the change in leadership and the change, what it means for you. >> the chairman is very focused on the concept we have heard in many years. the understanding that this market moves that like the speed . it is a huge amount of utility, some of these regulatory proceedings, by the time they are over there shifted radically. ofy don't have the luxury sitting on decisions for six months, it must, one year before they have to make decisions. i think the new commission is
12:00 am
committed to that kind of speed of action. >> watch the communicators monday night at 8:00 p.m. eastern on c-span two. >> coming up next, prime minister's questions at the british house of commons. then a look at the uk's defense strategy. that is followed by u.n. ambassador nikki haley talking about north korea and its recent missile test. >> during question time this past week, british prime minister theresa may was questioned about budget priorities and patient care at the uk's national health service. she was also asked about a new memorial honoring those who served in afghanistan and iraq. this is 35 minutes. >> order! questions for the prime minister. mrs. cheryl murray. >> question number one.


info Stream Only

Uploaded by TV Archive on